Participation in retirement plans by Generation Xers decreased to 59% in 2003 from 69% the previous year. Yet while the Generation X savings rate was on the wane, Baby Boomer participation jumped 6% to 77% from 71% in 2002, according to survey results released Tuesday by the Transamerica Center for Retirement Studies.
The dip in retirement plan participation may be due to the growing number of Generation Xers that are not confident they will be able to achieve a comfortable retirement; a number that increased to 13% in 2003 from only 6% in 2002. “Despite some positive signs, we’re seeing a worrisome trend of younger employees focusing on short term needs at the expense of long term benefits,” Catherine Collinson from the Transamerica Center for Retirement Studies said in a news release. “No doubt some of these workers are feeling the effects of our tough job economy, especially in the small business market.”
While the dip in retirement plan participation rates among any age group is reason for concern, overall, Generation X has gotten a jump on the elder generation in stashing away for the future. Nearly seven out of 10 Generation X workers – a strata between the ages of 25 and 38 – began saving for retirement before age 25, compared to only three in 10 of their Baby Boomer counterparts – workers between the ages of 39 and 57 – that started saving for retirement before age 26. In fact, despite the overall lower participation rates, Generation X currently spends just as much time reviewing their retirement accounts as Baby Boomers.
Maybe because of the time spent planning on their retirement is it that Generation Xers are less likely than Baby Boomers to expect a delay in their retirement (37% versus 43% of Baby Boomers) and most (54%) expect their personal financial situation to improve in 2004, versus 45% of Baby Boomers.
This early awareness in the importance of saving for retirement came through in the signs that Generation Xers are willing to take the necessary steps to improve their retirement planning, and remain somewhat optimistic about their finances. While a large number of Generation Xers agree they did not know as much as they should about investing (73%), an almost equal number (74%) express an interest in receiving more information and advice on how to reach their retirement goals.
“It’s promising to see younger workers taking an interest in learning more about their retirement savings,” says Collinson. “This is where the role of employers becomes so important in getting the word out about available resources. In most cases, the tools are available for younger workers to understand and take control of their retirement savings – they just aren’t being taken advantage of.”
The survey, conducted by Harris Interactive, wasconducted by telephone between August 12 and September 3, 2003 andincluded 300 small business executives and 600 full-time small businessemployees.The current and past surveys are available on the Center’s Web site at www.ta-retirement.com/thecenter .